July 2017, Issue 64

1

A T A G L A N C E

M&A activity in June 2017 struggled to build upon any recent favorable indicators. Globally, total deal volume by dollar value decreased from May 2017 volume by 3.5% to $263.00 billion, and the number of deals decreased by 5.8% to 3,116. The market’s downward trend was more pronounced in the U.S., where total deal volume by dollar value decreased over the same period by 8.1% to $94.44 billion, and the number of deals decreased by 21.7% to 662.

Strategic vs. Sponsor ActivitySponsor-related activity, both globally and in the U.S., slipped from its strong performance in May, decreasing in total dollar value by 3.5% to $78.32 billion and 26.8% to $40.31 billion, respectively, and in number of deals by 27.3% to 269 and 42.3% to 94, respectively. Global strategic activity experienced similar declines, with deal volume as measured by dollar value decreasing by 3.5% to $184.68 billion and number of deals decreasing by 3.1% to 2,847. Although the number of U.S. strategic deals decreased by 16.7% to 568, total dollar value increased by 13.5% to $54.13 billion. Figure 1 and Annex Figures 1A-4A.

Crossborder ActivityGlobal crossborder activity decreased both in total dollar value (by 20.0% to $75.29 billion) and in number of deals (by 3.2% to 757). In the U.S., although inbound activity decreased both in total dollar value (by 44.8% to $12.32 billion) and in number of deals (by 6.8% to 123), outbound activity increased in total dollar value by 95.8% to $13.16 billion and number of deals by 34.0% to 138. Figure 1 and Annex Figures 5A-7A.

In U.S. outbound activity, Germany led by total dollar value in June 2017 ($6.79 billion), while Canada held onto its lead in number of deals (27). Germany overtook the U.K.’s briefly-held position as the 12-month leader in outbound deal volume ($58.08 billion), although the U.K. maintained its 12-month lead in number of deals (312). As for U.S. inbound activity, Canada was the leading country of origin by total dollar value for June ($3.00 billion), while the U.K. maintained its 12-month lead ($105.26 billion). Canada was the leading country for inbound number of deals, both in June (31) and over the last 12 months (409). Figure 3.

U.S. Deals by IndustryRetail was the most active target industry in the U.S. by dollar value ($19.51 billion, driven primarily by Amazon.com, Inc.’s pending acquisition of Whole Foods Market, Inc. for $13.43 billion). Computers & Electronics remained the most active target industry in the U.S. by number of deals in June (169), and maintained its position as the most active target industry for the last 12 months, as measured by both dollar value ($216.24 billion) and number of deals (2,550). Figures 2 and 5.

U.S. Public MergersTurning to U.S. public merger terms, average target break fees and reverse break fees neared their 12-month averages, and were 3.4% and 5.7%, respectively, for the month of June 2017. Figures 6 and 7. The use of cash consideration in June (75.0%) was above the 12-month average (62.9%). Figure 9. The incidence of tender offers as a percentage of U.S. public mergers (18.8%) was below the 12-month average (21.5%). Figure 11. Finally, hostile offers were reported in 5.6% of U.S. public mergers in May 2017 (as compared to the 12-month average of 9.4%). Figure 12.

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

Figures 1-3 were compiled using data from Dealogic, and are for the broader M&A market, including mergers of any value involving public and/or private entities. Figures 4 and 5 were compiled using data from FactSet MergerMetrics, and are limited to mergers involving public U.S. targets announced during the period indicated and valued at $100 million or higher regardless of whether a definitive merger agreement was reached and filed or withdrawn. All data is as of July 10, 2017 unless otherwise specified. “Last 12 Months” data is for the period from July 2016 to June 2017 inclusive. Data obtained from Dealogic and FactSet MergerMetrics has not been reviewed for accuracy by Paul, Weiss.

By Volume (US$B)

June 2017

Last 12 Months

By Number of Deals

June 2017

Last 12 Months

$0 $100 $200 $300 $400

Consumer Products

Healthcare

Oil & Gas

Real Estate/Property

Retail

$14.32

$10.98

$9.28

$19.51

$14.75

$0 $100 $200 $300 $400

Leisure & Recreation

Utility & Energy

Healthcare

Oil & Gas

Computers & Electronics

$201.97

$216.24

$176.73

$141.10

$118.98

0 500 1,000 1,500 2,000 2,500 3,000

Insurance

Finance

Healthcare

Professional Services

Computers & Electronics 169

68

65

39

30

June 2017 Global +/- From Prior

Month

U.S. +/- From Prior

Month

Total

Volume (US$B) 263.00 (9.52) 94.44 (8.36)

No. of deals 3,116 (192) 662 (183)

Avg. value of deals (US$mil) 163.9 (9.6) 379.3 29.6

Avg. deal multiple1 11.1x (0.3) 13.9x 1.3

Strategic Transactions

Volume (US$B) 184.68 (6.71) 54.13 6.43

No. of deals 2,847 (91) 568 (114)

Avg. value of deals (US$mil) 122.5 (9.5) 251.8 60.2

Avg. deal multiple1 10.5x (0.4) 12.9x 2.0

Sponsor-Related Transactions

Volume (US$B) 78.32 (2.81) 40.31 (14.79)

No. of deals 269 (101) 94 (69)

Avg. value of deals (US$mil) 807.5 136.9 1,185.7 (38.8)

Avg. deal multiple1 13.7x 1.0 15.6x 1.1

Crossborder Transactions2

Volume (US$B) 75.29 (18.88) Inbound

12.32Outbound

13.16

Inbound

(10.00)Outbound

6.44

No. of deals 757 (25) Inbound

123Outbound

138

Inbound

(9)Outbound

35

Avg. value of deals (US$mil) 204.1 (52.6) Inbound

198.8Outbound

258.0

Inbound

(129.5)Outbound

9.1

Avg. deal multiple1 9.8x (1.0) Inbound

16.9xOutbound

8.6x

Inbound

6.3Outbound

(2.1)

Figure 1 Figure 2 - Most Active U.S. Target Industries3

M&A Activity

2

1 Ratio of enterprise value to EBITDA, trailing 12 months. This statistic is calculated using a smaller subset of deals for which this data is available.2 Global crossborder transactions are those where the acquirer and the target have different nationalities. Nationality is based on where a company has either its headquarters or a majority of its operations. U.S. crossborder transactions are those transactions where the acquirer and the target have different nationalities and either the acquirer (“Outbound”) or the target (“Inbound”) has a U.S. nationality.3 Industries categories are determined and named by Dealogic.

0 500 1,000 1,500 2,000 2,500 3,000

Oil & Gas

Finance

Healthcare

Professional Services

Computers & Electronics

1,136

988

2,550

437

551

A T A G L A N C E

Return to Summary

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

3

A T A G L A N C E

Figure 3 - Top 5 Countries of Origin or Destination for U.S. Crossborder Transactions

Inbound U.S. Crossborder Transactions for June 2017 Inbound U.S. Crossborder Transactions for the Last 12 Months

By Volume (US$B) By Volume (US$B)

By Number of Deals By Number of Deals

Outbound U.S. Crossborder Transactions for June 2017 Outbound U.S. Crossborder Transactions for the Last 12 Months

By Volume (US$B) By Volume (US$B)

By Number of Deals By Number of Deals

$0 $30 $60 $90 $120 $150

Netherlands

United Kingdom

Canada

Switzerland

Germany $6.79

$3.44

$1.33

$0.34

$0.28

$0 $30 $60 $90 $120 $150

France

Japan

China

Canada

United Kingdom

$89.98

$46.88

$45.83

$22.43

$105.26

0 100 200 300 400 500

Germany

China

United Kingdom

Japan

Canada 409

195

185

98

146

$0 $30 $60 $90 $120 $150

Israel

Switzerland

Netherlands

United Kingdom

Germany

$53.54

$58.08

$52.13

$16.78

$39.57

0 100 200 300 400 500

Brazil & France

Australia

Germany

Canada

United Kingdom 312

291

119

97

614

0 100 200 300 400 500

France

China

United Kingdom

Japan

Canada 31

15

12

14

9

0 100 200 300 400 500

Netherlands

Australia

Germany

United Kingdom

Canada

24

27

18

8

7

4 Each of Brazil and France was the country of destination for 61 transactions in the last 12 months.

$0 $30 $60 $90 $120 $150

China

Singapore

Netherlands

United Kingdom

Canada $3.00

$2.42

$2.10

$1.72

$1.00

M&A Activity (Continued)Return to Summary

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

June 2017

Equity Value (US$B)

Last 12 Months

Equity Value (US$B)

Average Value of Five Largest U.S. Public Mergers Average Value of All U.S. Public Mergers

Aug 20

16

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar

201

7

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$2,927.7

$1,585.0

$2,134.1

$2,405.7$2,736.7 $1,041.0

$13,404.5

$3,168.1$2,829.2

$1,673.2$1,014.3

$2,305.7

$7,570.1

$4,338.2$5,526.2

$6,674.4$8,095.5

$1,427.0

$39,975.8

$8,104.8$8,655.8

$3,933.5$2,085.5

$7,031.7

$0 $20 $40 $60 $80 $100

Level 3 Communications, Inc. ~ CenturyLink, Inc.(October 31, 2016)

Spectra Energy Corp ~ Enbridge, Inc.(September 6, 2016)

Baker Hughes, Inc. ~ General Electric Co.(October 31, 2016)

Reynolds American Inc. ~ British American Tobacco Plc(October 21, 2016)

Time Warner Inc. ~ AT&T Inc.(October 22, 2016)

$25.27

$83.37

$49.22

$35.90

$28.33

$0 $20 $40 $60 $80 $100

PAREXEL International Corp. ~ Pamplona Capital Management LLP(June 19, 2017)

DuPont Fabros Technology, Inc. ~ Digital Realty Trust, Inc.(June 9, 2017)

Rice Energy, Inc. ~ EQT Corp.(June 19, 2017)

Staples, Inc. ~ Sycamore Partners Management LP(June 28, 2017)

Whole Foods Market, Inc. ~ Amazon.com, Inc.(June 16, 2017)

$13.43

$4.95

$4.50

$6.70

$5.58

Figure 4 - Average Value of Announced U.S. Public Mergers (in US$mil)

Figure 5 - Five Largest U.S. Public Mergers

4

A T A G L A N C E

M&A Activity (Continued)Return to Summary

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

5 Based on the highest target break fees and reverse break fees payable in a particular deal.6 Three transactions in June 2017 involving a strategic buyer had a reverse break fee.7 Zero transactions in June 2017 had a go-shop provision.

8 Zero transactions in June 2017 involving a financial buyer had a go-shop provision.9 Zero transactions in June 2017 involving a strategic buyer had a go-shop provision.

M&A Terms

Avg. Reverse Break Fee as % of Equity ValueAvg. Target Break Fee as % of Equity Value

Average Value of All U.S. Public Mergers with Definitive Agreements

Jun 2

017

Jul 2

016

Apr 20

17

Mar 20

17

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Aug 20

16

May 20

17

(US$mil)

6%

12%

$5,000

$10,000

$15,000

3.3

4.9

3.6

9.0

3.6

5.2

3.6

4.4

3.5

5.8

3.6

4.7

3.3

4.1

3.3

5.1

3.6

6.2

3.3

4.9

3.6

5.5

3.4

5.7

$3,029.1

$1,819.8$2,250.3 $2,488.3

$2,888.2

$1,184.3

$13,404.5

$3,168.1$3,248.5

$1,803.2

$1,039.1

$2,555.6

Figure 6 - Average Break Fees as % of Equity Value5

Figure 7 - Average Break Fees as % of Equity Value

June 2017

Last 12 Months

Target Break Fee for All Mergers 3.4 3.5

June 2017

Last 12 Months

Reverse Break Fee for All Mergers 5.7 5.4

Reverse Break Fee for Mergers Involving Financial Buyers

6.2 6.4

Reverse Break Fee for Mergers Involving Strategic Buyers6

4.8 5.1

June 2017 Last 12 Months

% of Mergers with Go-Shops 0.0 9.1

% of Mergers Involving Financial Buyers with Go-Shops

0.0 38.7

% of Mergers Involving Strategic Buyers with Go-Shops

0.0 3.2

Avg. Go-Shop Window (in Days) for All Mergers with Go-Shops7

N/A 35.1

Avg. Go-Shop Window (in Days) for Mergers Involving Financial Buyers with Go-Shops8

N/A 35.9

Avg. Go-Shop Window (in Days) for Mergers Involving Strategic Buyers with Go-Shops9

N/A 33.0

Figure 8 - U.S. Public Merger Go-Shop Provisions

Figures 6-12 were compiled using data from FactSet MergerMetrics, and are limited to select mergers involving public U.S. targets announced during the period indicated, valued at $100 million or higher and for which a definitive merger agreement was reached and filed (unless otherwise indicated). Data obtained from FactSet MergerMetrics has not been reviewed for accuracy by Paul, Weiss.

5

A T A G L A N C E

M&A Activity (Continued)Return to Summary

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

10 Due to rounding, percentages may not add up to 100%.11 This data includes both announced transactions for which a definitive merger agreement was reached

and filed and those for which a definitive merger agreement was never reached and filed (including withdrawn transactions).

Cash Only

Stock Only

Cash & Stock Only

Choice (Cash Election)

Other

Last 12 Months

June 2017

5.9%

62.9%18.8%

12.4%

75.0%

12.5%

12.5%

June 2017 100.0

Last 12 Months 91.4

June 2017 18.8

Last 12 Months 21.5

Figure 11 - Tender Offers as % of U.S. Public Mergers

Figure 12 - Hostile/Unsolicited Offers as % of U.S. Public Mergers11

June 2017 5.6

Last 12 Months 9.4

Figure 9 - Form of Consideration as % of U.S. Public Mergers10 Figure 10 - % of Partial and All Stock Deals That Have a Fixed Exchange Ratio

Our Mergers & Acquisitions PracticeThe Paul, Weiss M&A Group consists of more than 30 partners and over 100 counsel and associates based in New York, Washington, Wilmington, London, Toronto, Tokyo, Hong Kong and Beijing. The firm’s Corporate Department consists of more than 60 partners and over 200 counsel and associates.

Our M&A Group is among the most experienced and active in the world. We represent publicly traded and privately held companies, leading private equity firms, financial advisors, and other financial institutions and investors in their most important mergers and acquisitions, joint ventures and other strategic transactions.

Our expertise advising corporations and private investors in a broad range of sophisticated transactions enables us to identify new opportunities for our clients to realize value. We have particular experience in guiding clients as they engage in proxy battles, company-altering and market consolidating transactions or capital markets transactions.

Recent highlights include advising: Time Warner Cable in its $79 billion merger with Charter Communications; Qualcomm in its approximately $47 billion pending acquisition of NXP Semiconductors; Agrium in its $36 billion pending merger of equals with Potash Corp. of Saskatchewan; funds affiliated with Apollo Global Management and Protection 1 in their $15 billion acquisition of ADT Corporation; Alere in its $8 billion pending acquisition by Abbott Laboratories; ARIAD Pharmaceuticals in its approximately $5.2 billion acquisition by Takeda Pharmaceutical Company; Air Methods Corporation in its $2.5 billion acquisition by affiliates of American Securities; Kate Spade & Company in its $2.4 billion acquisition by Coach; and the Board of Directors of Xerox in its separation of the company into two public companies.

Paul, Weiss is a leading law firm serving the largest publicly and privately held corporations and financial institutions in the United States and throughout the world. Our firm is widely recognized for achieving an unparalleled record of success for our clients, both in their bet-the-company litigations and their most critical strategic transactions. We are keenly aware of the extraordinary challenges and opportunities facing national and global economies and are committed to serving our clients’ short- and long-term goals.

6

A T A G L A N C E

M&A Activity (Continued)Return to Summary

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

Matthew W. Abbott

Edward T. Ackerman

Scott A. Barshay

Angelo Bonvino

Jeanette K. Chan

Ellen N. Ching

Ariel J. Deckelbaum

Ross A. Fieldston

Brian P. Finnegan

Adam M. Givertz

Neil Goldman

Bruce A. Gutenplan

Justin G. Hamill

David M. Klein

David K. Lakhdhir

Stephen P. Lamb

John E. Lange

Xiaoyu Greg Liu

Brian C. Lavin

Jeffrey D. Marell

Alvaro Membrillera

Judie Ng Shortell

Kelley D. Parker

Carl L. Reisner

Kenneth M. Schneider

Robert B. Schumer

John M. Scott

Tarun M. Stewart

Steven J. Williams

Betty Yap

Kaye N. Yoshino

Tong Yu

Taurie M. Zeitzer

This publication is not intended to provide legal advice, and no legal or business decisions should be based on its content. Questions concerning issues addressed in this memorandum should be directed to:

Our M&A Partners

Ariel J. Deckelbaum Partner New York +1-212-373-3546 Email

Scott A. Barshay Partner New York +1-212-373-3040 Email

Matthew W. Abbott Partner New York +1-212-373-3402 Email

Angelo Bonvino Partner New York +1-212-373-3570 Email

Jeffrey D. Marell Partner New York +1-212-373-3105 Email

7© 2017 Paul, Weiss, Rifkind, Wharton & Garrison LLP. In some jurisdictions, this publication may be considered attorney advertising. Past representations are no guarantee of future outcomes.

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P P A U L W E I S S . C O M

NEW YORK BEIJING HONG KONG LONDON TOKYO TORONTO WASHINGTON, D.C. WILMINGTON

Counsel Frances F. Mi, associates Ryan D. Blicher, Edy Glozman, Yae Na Woo and Michael N. Wysolmerski and law clerk David Okada contributed to this publication.

A T A G L A N C E

Figure 1A - U.S. Deal Volume (US$B)

Figure 2A - Global Deal Volume (US$B)

M&A Activity – 12-Month Trends

A - 8

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar 20

17

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Aug 20

16

Strategic TotalSponsor

$0

$80

$160

$240

$320

$400

$114.25 $110.87$127.86

$354.94

$154.54

$88.14$112.53

$98.77

$69.65

$108.06 $102.80 $94.44$72.45 $73.16 $109.26

$315.89

$116.46

$56.43 $80.19$73.97

$46.11

$87.02

$47.70

$54.13

$41.80 $37.72$18.60

$39.05 $38.08 $31.71 $32.34 $24.81 $23.54 $21.03

$55.10

$40.31

Aug 20

16

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar

201

7

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Strategic TotalSponsor

$0

$100

$200

$300

$400

$500

$600

$311.29

$223.30

$324.21

$565.87

$315.99

$383.68

$284.94

$179.14

$281.98$257.97 $272.52 $263.00

$241.33$170.75

$273.79

$486.35

$243.92

$303.33

$237.74

$136.13

$219.42 $205.08 $191.39 $184.68

$69.97 $52.55 $50.42$79.52 $72.07 $80.35

$47.20 $43.02 $62.56 $52.88$81.14 $78.32

A T A G L A N C E

A N N E XReturn to Summary

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

Figure 3A - U.S. Number of Deals

Figure 4A - Global Number of Deals

A - 9

A T A G L A N C E

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar 20

17

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Aug 20

16

Strategic TotalSponsor

0

200

400

600

800

1,000

656

741 762 734

860 819984 876

939

750

845

662

516582

612583

699 719 834 709

782

610

682

568

140 159 150 151 161

100150 167 157 140

163

94

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar 20

17

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Aug 20

16

Strategic TotalSponsor

0

800

1,600

2,400

3,200

4,000

3,069 3,035 3,0552,892

3,3883,208 3,275

3,057

3,710

2,961

3,3083,116

2,722 2,720 2,7252,548

3,037 2,935 2,9392,711

3,359

2,646

2,938 2,847

347 315 330 344 351 273 336 346 351 315 370269

A N N E XReturn to Summary

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P

P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N L L P A - 1 0

A T A G L A N C E

Figure 5A - Inbound U.S. Crossborder Transactions

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar

201

7

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Aug 2

016

By Volume (US$B) By Number of Deals

$0

$20

$60

$40

$80

$100

$120

100

150

200

$27.06 $26.83 $66.20 $107.42 $28.55 $24.47 $23.15 $38.11 $22.24 $27.19 $22.32 $12.32

109118

139

122

160

136

151

166 161

126 132123

Figure 6A - Outbound U.S. Crossborder Transactions

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar 20

17

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Aug 2

016

By Volume (US$B) By Number of Deals

$0

$20

$40

$60

$80

$100

0

100

200

$10.70 $10.38 $20.58 $60.64 $5.36 $81.05 $37.87 $11.96 $23.94 $7.79 $6.72 $13.16

117

140

115128

170

123

166150

142

117103

138

Figure 7A - Global Crossborder Transactions

Jul 2

016

Jun 2

017

May 20

17

Apr 20

17

Mar 20

17

Feb

2017

Jan 2

017

Dec 20

16

Nov 20

16

Oct 20

16

Sep 20

16

Aug 2

016

By Volume (US$B) By Number of Deals

$0

$50

$100

$150

$200

$250

100

500

1000

$124.40 $62.82 $133.83 $215.28 $75.67 $201.87 $115.23 $73.62 $97.91 $79.69 $94.18 $75.29

733 741 743688

897815 853 815

894

704782 757

A N N E XReturn to Summary